AvestaPolarit Pension Scheme – Money Purchase section.
Insert to Members' Handbook (September 2012) for the Defined Contribution (DC - Money Purchase) Section
Introduction.
Since the Members' Handbook was last updated in September 2012 some amendments have been made to the Trust Deed and Rules for the Scheme. In addition a number of legislative changes to the U.K. pension’s environment have been made. This document should therefore be read alongside the Handbook as it sets out alterations to the provisions described in the Handbook and notes changes in the general environment for pensions arising from Government legislation. Since 2012 there has been significant legislation relevant to pensions and only the main points are covered here.
As with the main Handbook, this document provides a summary only and full details are provided in the Scheme's Trust Deed and Rules including relevant Deeds of Amendment. The Trust Deed and Rules are the formal and overriding documents that govern the Scheme and in the event of any discrepancy, the Trust Deed and Rules prevail.
In the spring of 2016 the Company announced an intention to close the Scheme DB section to future accrual and is to consult on its detailed proposals. Depending on the outcome further amendments to Scheme Rules, including for the DC section may be appropriate and will be communicated accordingly.
1. Auto-Enrolment
Legislation now requires most employees to be automatically enrolled into Scheme membership on joining the Company and to be automatically re-enrolled at given frequencies thereafter. Scheme Rules have been modified to recognise this.
2. Same Sex Marriage.
Scheme Rules have been changed to recognise legislation giving rights to Same Sex Marriage partners in respect of dependent pensions. (Benefits Payable on death – paras 41-45).
3. Short Service Refunds.
Scheme Rules have been changed to recognise legislation which limits the ability of a member to opt for a refund of contributions if they are employees who exit the scheme after only short service. These changes are relevant to Paras 49 – 50 of the Handbook accordingly.
4. Salary Sacrifice.
The Company has introduced Salary Sacrifice arrangements in respect of pension contributions, including AVCs (to allow benefits to it and to the member in terms of National Insurance costs). Members may opt out of such arrangements. Scheme rules have been modified to align with this and the Handbook Section 4: Contributions should be read in this context. The tables shown illustrate the situation prior to salary sacrifice being applied.
5. State Pension and LTA/AA Allowances.
The arrangements for State Pension from April 2016 have been subject to significant change. Section 6: State Pension reflects pre-2016 arrangements. For new arrangements (pending further formal updating of the Handbook) refer to Government publications and websites. These will also provide detailed information relevant to high earners with regard to Lifetime Allowance (LTA) and Annual Allowance which restrict tax advantages if pension accounts or contributions exceed given levels.
6. Freedom and Choice.
Increased flexibility in the ways that DC pension funds can be accessed have become available since April 2015 when the majority of the Government’s Freedom and Choice pension provisions were put in place.
The changes meant that, in addition to the traditional cash lump sum plus annuity options, flexible income drawdown and further options to access cash also potentially became available. However the principles that access is only available from minimum pension age and above and that only 25% of the fund is available tax-free remain, and there are also safeguards to minimise the abuse of tax-relief on contributions.
Some options (e.g. drawdown) will only be available by transferring out of the Scheme to another approved arrangement. External providers continue to formulate their product offerings to suit the new environment.
Accessing the new flexibilities can have a number of potential pitfalls such as incurring higher rates of tax, incurring high charges to access services and products, and more seriously falling prey to scammers. Therefore, if you believe that accessing these options could be the most appropriate choice for you, you are strongly advised to consult a registered independent financial advisor that you can trust.
Section 4 of the Handbook and in particular “Your Benefits at Retirement” (paras 31 – 40) relate to the previous norm where members used their pension to buy a pension for life (or Annuity). While Annuity options remain available the new provisions offer additional options not covered here.
- Further information.
You can find out more information on the Scheme from:-
the Scheme Administrator: Jardine Lloyd Thompson - Telephone Helpline 0870 1607329
the Scheme Secretary: Julie Hoyland - Telephone 0114 2614031 e-mail:
the Scheme website: https://www3.savingforthefuture.com/avesta
May 2016